Capitalism is an economic system, while it can also be an apparatus that people can use to make more money for themselves and take more money from others. At its heart, it rewards those who work hard, but it also rewards those who are willing to take advantage of others. 

Reverse Merger.Listing a company on the stock exchange normally requires audits and public vetting, but the banks use reverse merger around all that. A shell company is a public-traded stock that has no operations underneath it. A company looking for a way into American exchanges merges with the shell of a defunct U.S. company that no longer operates, but still legally exists and had a listing on a U.S. stock exchange. The company than take the shell company’s place in the market.

Short selling, all kinds of commercial transactions are short selling. An airline that sells you advance-purchase tickets is shorting you a seat. Short selling is betting that the stock is gonna go down as opposed to go up. You will often hear it referred as “borrowing shares”. 

For example, I want to short sugar, I think that the sugar is overvalued and is going to cost less in 6 months than it does today. I borrow one pound of sugar from my neighbor, and I turn around and sell the sugar for the going rate 1 dollar a pound. In six month I go to buy 1 pound sugar, it only costs me 50 cents, I give my neighbor a pound sugar plus a little extra for interest and pocket the 50-cent difference. 

You want everybody else who is trading in that stock to believe what you are saying if you think that the company is a fraud or you think something about the company is not true. 

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